The U.S. Should Privatize Air-Traffic Control

W ith the news of nationwide flight delays due to an FAA systems failure today, it’s important to remember that there’s no reason government must be in charge of air-traffic control at all. Privatizing air-traffic control wouldn’t make it perfect, but it would fix some of the problems with the current government model.

The FAA is both the industry’s safety regulator and the provider of air-traffic-control services. But there is no reason for the FAA to do both of those tasks. It should instead continue to regulate safety while its air-traffic-control responsibilities are handed off to the private sector.

Air-traffic control is one of those things that we often think of as a public good simply because it has been handled by the federal government for a long time. But economic theory does not demand that air-traffic control be provided by the government. Public goods are non-rivalrous, meaning that one person using the good does not mean less of the good for everyone else, and non-excludable, meaning that there’s no way to prevent free-riding.

Air-traffic control is non-rivalrous; one plane’s using air-traffic control does not mean less air-traffic control for other planes. But it fails the non-excludability test, because a system of user fees, in which airlines and private planes paid for air-traffic-control services, would be easily workable. Goods that are non-rivalrous but excludable are called “club goods,” and private provision of them is theoretically sound.

Canada has proven that private air-traffic control is also sound in practice. In 1996, under a Liberal government, Canada privatized its air-traffic-control system, creating a nonprofit corporation called Nav Canada that is fully funded by users of the system and thus doesn’t cost taxpayers a cent.

Looking back over its first 20 years of operations, Robert Poole of the Reason Foundation found in 2016 that Nav Canada had succeeded in just about every respect: Safety was improved, technology was modernized quickly, and costs were reduced.

The downside of government control primarily comes from uncertainty about funding levels. Every year, the FAA must be reauthorized by Congress, and the funding it receives depends on political factors that have little to do with air-traffic control. A 2015 Government Accountability Office report found that budget uncertainty is a major reason why the FAA has been slow to modernize its technology.

The FAA’s NextGen air-traffic-control-modernization program has been ongoing for about 15 years already, and it isn’t scheduled to reach its goals and end until 2030. Handing off air-traffic control to a private nonprofit, unburdened by the FAA’s funding uncertainty and other responsibilities, would be better. An American Action Forum report from 2017 found that Canada had been able to modernize its air-traffic-control technology faster than the U.S.

Proposals to spin off air-traffic control from the FAA have been floated for decades. A report for the secretary of transportation in 1994 said, “Since 1985, seven major studies have recommended creating a government corporation to provide ATC services.” Robert VerBruggen wrote about the need for privatization for National Review in 2011, and a bill was introduced in the House to create an American equivalent to Nav Canada in 2017. Improvement wouldn’t require a significant amount of policy innovation; it would just require building on past American privatization proposals and on what has worked in Canada.

Privatizing air-traffic control would also have the added benefit of eliminating a public-sector union. When the Reagan administration fired the air-traffic controllers who illegally went on strike in 1981, it also decertified their union. But today, air-traffic controllers are represented by a different union. Public-sector unions create perverse incentives that have the effect of placing the interests of the public below the interests of the union; these unions should be eliminated wherever possible. A privatized system could still have a unionized workforce, as Canada’s does, without any of the problems unique to public-sector unions.

Air-traffic control would be better provided by a private nonprofit corporation dedicated solely to that task, with executives who could be held accountable for performance and who could make their own decisions without needing to beg Congress for money. Instead of blaming government for failures in air travel, we should remove government from the aspects of air travel that could be better handled by the private sector.